…economy, the sub-prime crisis in the United States, all-time record oil prices. But with careful management we can continue to keep the Australian economy growing and we can provide work for young Australians. Here at WesTrac Caterpillar, this company is providing hundreds of apprenticeships in assembly, in mechanical work, in reconditioning motors and transmissions as part of skilling Australia for its future. And I want to congratulate the company for what it is doing. The Australian Government wants to increase the opportunity for apprenticeships and skills training with a hundred new technical schools so that we can continue to build the skills required for this investment surge which will work out at increased economic capacity. Now more than ever, strong experienced economic management is important so the Australian economy can continue to grow, create jobs and build a lifestyle which is the envy of the world.

I want to pay tribute to Stuart Henry the Member for Hasluck, who has been a big part of the Government’s training and trade policy contributors for all of the work that he has done on this and that is why we are here today, to have a look at what is going on at WesTrac Caterpillar and see some of this wonderful investment which will drive our economy into the future.

JOURNALIST:

Senator Barnaby Joyce says you are spending too much time talking about the economy and you are facing annihilation. Is he right?

TREASURER:

Well there is nothing more important than the economy because it is the economy that gives people jobs. It is the economy that creates the revenue that funds the education system and the health system. If you don’t have a strong economy you won’t have a strong health system or education system. You won’t have people in work. People won’t be able to service their mortgages. That is when you have a real crisis on your hands with mass unemployment as we did in the recession of the 1990s. There is nothing more important to talk about than the economy and the opportunity that it gives Australians of all ages in relation to their future.

JOURNALIST:

Mr Joyce also said that there is a sense of frustration because the polls are decreasing.

TREASURER:

Well as I move around Australia I think the choice is becoming clearer and the race is tightening. People are beginning to think who they want to trust with managing the Australian economy. Who they want to trust with their business, their mortgage, their job. Who they want to trust to build an economy which can fund an education system and a health system. And I find as I move around Australia, the choice is becoming clearer. People are worried about an inexperienced Rudd, Swan, Gillard team. They are worried about the fact that unions are threatening to come back. They are worried about increased industrial disruption and stoppages and what that would mean for our economy and they want to make sure that they have a strong future.

JOURNALIST:

Mr Costello, is it fiscally responsible to provide the education reform programme that was announced recently to be providing that as a handout to Australians instead of actually giving that to schools? Wouldn’t it be better spent if it was going into the schools pockets?

TREASURER:

No well of course, where parents contribute to the cost of educating their children, sometimes with voluntary levies to government schools, paying for excursions, sometimes with fees to government schools, they are investing. If the parents weren’t investing, the schools wouldn’t be able to provide all of these services and what we are doing is we are rebating part of that cost back to the parents. Give the money to the parent, let the parents invest in their children. This is a direct way of helping people help their children in the educational system. And that is what we believe in. Helping parents with educational costs, helping them with the education of their children.

JOURNALIST:

And that is more important than helping schools?

TREASURER:

Well if you help parents with the cost of education, that does help schools. Because where parents invest in education that helps the school where parents invest in their children, that helps the school. The point of running schools is the for benefit of children and if you help parents, you are helping children.

JOURNALIST:

That would be the rebate (inaudible) the schools to increase their fees and charges though.

TREASURER:

I don’t think there is any reason whatsoever for private schools to increase their fees. What you have got coming out of this is you have got a government rebating 40 per cent of the costs, costs up to $1,000 for a primary school, costs up to $2,000 for a secondary school student. The parents are still paying the balance. I don’t think the parents would be too impressed if schools put up their fees.

JOURNALIST:

I thought it was only $800 for a high school student.

TREASURER:

40 per cent of costs up to $2,000, I think you will find that 40 per cent of $2,000 is $800.

JOURNALIST:

Analysts are saying your spending splurge earlier in the week is going to push…

TREASURER:

Sorry, who it?

JOURNALIST:

Analysts are saying, you know what analysts (inaudible) spending splurge is going to push inflation up. What is your reaction?

TREASURER:

Well actually, our forecast for inflation over the next two years is 2¾ per cent. The Reserve Bank forecast over the next two years is a little below 3 per cent which is more or less our forecast. To think that the Australian economy could be in its longest period of expansion with more people in work than ever before and unemployment at nearly 4 per cent and inflation still around the 2 to 3 per cent mark, shows you really how far we have come. How far economic reform has brought us. The last time we had unemployment at 4 per cent, inflation was 16½ per cent. 16½ per cent. Now on a 4 per cent unemployment rate it is, what, around 2 to 3. That is very, very different and much lower than 16½ per cent.

JOURNALIST:

ABS figures out today show that wage growth for the year to September has reached 4. 2 per cent which is closer to the Reserve Bank’s comfort level of 4. 5, are you still in control of the inflation?

TREASURER:

Well to think that wages would be increasing at 4 per cent or a little bit over 4 per cent when we have more Australians in work than ever before and an unemployment rate at 30 year lows. When the last time we had unemployment at this level, inflation was 16½ per cent. To think that you have got inflation at 2 to 3 per cent and wage growth at 4 per cent with rising productivity underpinning that wage growth, shows you how far we have come. But I will tell you this. If you get rid of this industrial relations system and you go back to union control, if you go back to unions pegging award rises from factory to factory and State to State and industry to industry, you won’t have wages growth at 4 per cent and rising productivity, you will have falling productivity and that will put real pressure on inflation.

JOURNALIST:

Mr Costello…

TREASURER:

Last question.

JOURNALIST:

…just Labor is due to announce their new policy today and they were saying that their preview is that their spending is going to be more economically conservative than the Federal Government. What do you have to say about this?

TREASURER:

When was the first time Kevin Rudd ever described himself as an economic conservative? It was this year in 2007. But in all of the years that he has been in the Australian Parliament – 98, 99, 2000, 2001, 2, 3, 4, 5, 6 – he never described himself as an economic conservative. He described himself as a Christian Socialist but not an economic conservative. This is something that an advertising agency has told him to say, he doesn’t believe it, he doesn’t understand it. Kevin Rudd has never balanced a budget, never repaid a dollar in debt, never supported tax reform, never promoted small business, never defended free enterprise. This is a government that has been doing it a lot longer than Kevin Rudd who discovered economic conservatism some time a few months ago after he was fed the line by an advertising agency. Thanks.